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17 Fla. counties continue to battle online travel sites over bed tax money

Some Florida counties say online travel sites like Expedia and Orbitz aren't paying their fair share of bed taxes.

Escambia and Okaloosa Counties are part of a legal battle that's entering its fourth year.

The case could end up in the Florida Supreme Court.

If you walk into a hotel or condo in south Okaloosa County and rent a room, you'd pay bed tax based on that room rate.

But if you rent that room from an online travel agency, for example Expedia, the accounting isn't so simple.

A travel website is basically a middleman.

Travel agent Tammy McDaniel says they negotiate special rates with lodging providers, then charge their online customers a little more; a sort of service fee.

"I think the controversy is about the difference in amount," McDaniel said.  "Are they going to be taxed for the full amount, or the negotiated rate with the condo or hotel."

The online agencies have been paying bed tax only on the room rate, not on the extra money they collect from their customers.

"Millions of dollars, millions of dollars that counties would be able to collect," McDaniel said.

Seventeen Florida counties are suing a group of online travel agencies to get that money.

Business owner Bobby Nabors questions whether the law is on their side.

"These OTAs aren't doing anything illegal. They're not skating around the law. The law applies to the fee for the room, and that's what they're paying the tax on," Nabors said.

Since 2009, courts have consistently ruled in favor of the online agencies.

This week, an appeals panel asked the Florida Supreme Court to settle the issue.

Nabors says it's a matter for the legislature, driven by a problem that isn't going away.

"Every government entity just wants more money. They're tired of making cuts, they're tired of not giving raises. They're hearing it from hundreds of thousands of employees. It's a tough spot to be in," Nabors said.

There's no guarantee the Florida Supreme Court will hear this case, but the appeals court that sent it up says it's a matter of "great public importance".